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EXHIBIT 4.4 SERVICE AGREEMENT

Consulting Services Agreement

EXHIBIT 4.4   SERVICE AGREEMENT | Document Parties: THE ROYAL BANK OF SCOTLAND plc | Frederick Inglis Watt You are currently viewing:
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THE ROYAL BANK OF SCOTLAND plc | Frederick Inglis Watt

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Title: EXHIBIT 4.4 SERVICE AGREEMENT
Date: 3/29/2005
Industry: Money Center Banks     Sector: Financial

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EXHIBIT 4.4

 

SERVICE AGREEMENT

between

THE ROYAL BANK OF SCOTLAND plc

and

Frederick Inglis Watt
------------------------------

 

11 March 2005

 

The Royal Bank of Scotland plc
42 St Andrew Square
Edinburgh

 


 

1

 

 

INDEX

 

 

 

 

 

 

 

 

 

 

 

 

Clause

 

 

 

 

Page

 

 

 

 

 

 

1.

 

 

Definitions, Interpretation and Construction

 

3

 

 

 

 

 

 

Main Terms and Conditions

 

 

2.

 

 

Position

 

5

3.

 

 

Commencement, Duration & Notice

 

5

4.

 

 

Continuous Employment

 

5

5.

 

 

Duties

 

5

6.

 

 

Place of Employment

 

7

7.

 

 

Hours of Work

 

7

8.

 

 

Other Interests

 

7

 

 

 

 

 

 

Main Terms & Conditions – Benefits & Reward

 

 

9.

 

 

RBS elect

 

7

10.

 

 

Bonuses

 

8

11.

 

 

Profit Sharing

 

8

12.

 

 

Executive Share Option Scheme

 

9

13.

 

 

Pension Scheme and Death-in-Service

 

9

14.

 

 

Holidays

 

10

15.

 

 

House Purchase and Staff Borrowing

 

11

 

 

 

 

 

 

Supplementary Information

 

 

16.

 

 

Expenses

 

11

17.

 

 

Dealings in Investments

 

11

18.

 

 

Sickness

 

12

19.

 

 

Confidentiality

 

14

20.

 

 

Property in Confidential Material

 

15

21.

 

 

Intellectual Property – Patents & Trademarks

 

15

22.

 

 

Redundancy and Early Retirement

 

16

23.

 

 

Termination

 

16




 

2

 

 

24.

 

 

Restrictive Covenant

 

18

25.

 

 

Deductions

 

20

26.

 

 

Power of Attorney

 

21

27.

 

 

Grievance Procedure

 

21

28.

 

 

Disciplinary Procedures

 

21

29.

 

 

Notices

 

22

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

31 .

 

 

Continuing Provisions

 

22

32.

 

 

Whole Agreement and Severability

 

22

33.

 

 

Collective Agreements

 

23

34.

 

 

Governing Law

 

23

 

 

 

 

 

 

Schedule

 

 

Executive Severance Arrangements

 

24






3

SERVICE AGREEMENT


Between


THE ROYAL BANK OF SCOTLAND plc
a company incorporated in Scotland (No 90312) and having its registered office at 36 St Andrew Square, Edinburgh EH2 2YB (hereinafter called "the Company") of the one part


and


Frederick Inglis Watt,
residing at Summerhayes, Lunghurst Road, Woldingham, Surrey, CR3 7EJ (hereinafter called "the Executive") of the other part


THE AGREEMENT BETWEEN THE PARTIES IS AS FOLLOWS:-

1.      

DEFINITIONS, INTERPRETATION AND CONSTRUCTION

 

 

(a)      

In this Agreement, unless otherwise stated, the following definitions apply:

 

 

 

(i)      

"Associated Company" means any company (i) having an ordinary share capital of which not less than 25 per cent is owned directly or indirectly by the Company or (ii) a holding company of the Company or any subsidiary of any such holding company;

 

 

 

(ii)      

"the Board" means the Board of Directors of the Company or an authorised committee of the Board of Directors of the Company;

 

 

 

(iii)      

“the Main Board” means the Board of Directors of the Company;

 

 

 

(iv)      

"the Group" means the Company and its Associated Companies.

 

 

 

(v)      

"the Remuneration Committee" means the Remuneration Committee of the Board or any committee empowered by the Board in substitution for the Remuneration Committee;

 

 


 

4

(vi)      

“RBSG” means The Royal Bank of Scotland Group plc having its registered office at 36 St Andrew Square, Edinburgh EH2 2YB;

 

(vii)      

the expressions "subsidiary" and "holding company" have the same meanings in this Agreement as they have in Section 736 of Companies Act 1985; and

 

(viii)      

the expressions "associated company", "associate" and "control" have the same meanings in this Agreement as they respectively bear in Sections 416, 417 and 840 of the Income and Corporation Taxes Act 1988.

 

 

(b)      

In this Agreement:

 

 

(i)      

unless otherwise stated, references to statutes, rules or regulations or their provisions will also include amendments, extensions, consolidations or replacements and will refer to any orders or regulations, instruments or subordinate legislation;

 

 

(ii)      

the masculine gender shall include the feminim gender and singular number shall include the plural and vice versa;

 

 

(iii)      

unless otherwise stated, references to clauses and sub-clauses are references to clauses and sub-clauses of this Agreement;

 

 

(iv)      

the headings to clauses are for convenience only and shall not affect the construction or interpretation of this Agreement; and

 

 

(v)      

the provisions of the Schedules and any additional terms entered into in writing by or on behalf of the parties shall be read and construed as part of this Agreement and shall be enforceable accordingly.

 

 


 

5

2.      

POSITION

 

 

The Executive will be employed as Group Finance Director and agrees to accept the position on the terms and conditions set out in this Agreement. The Company shall be entitled from time to time to appoint any other person or persons to act jointly with the Executive.

 

3.      

COMMENCEMENT, DURATION & NOTICES

 

 

(a)      

This Agreement and the Executives employment commenced on the 4 th September 2000 and will continue unless terminated, subject to the provisions of Clauses 22 and 23, by the Company giving to the Executive twelve months’ prior written notice of termination or by the Executive giving to the Company six months’ prior written notice of termination.

 

 

(b)      

this Agreement shall automatically terminate without notice on the Executive reaching the retirement age of sixty (60) years of age.

 

4.      

CONTINUOUS EMPLOYMENT

 

 

The Executive's period of continuous employment with the Company commenced on the 4 th September 2000.

 

5.      

DUTIES

 

 

(a)      

The Executive shall, in his role as Group Finance Director, devote the whole of his time, attention and skill during his hours of work as specified in Clause 7 to the business of the Company and shall faithfully, efficiently, competently and diligently perform such duties and exercise such powers, authorities and discretions which may be assigned to or vested in him by the Board and shall obey all reasonable and lawful directions given by or under the authority of the Board and use his best endeavours to promote and extend the business of the Company and to protect and further its interests and reputation.

 

 

(b)      

The Executive may be required, to perform services not only for the Company but also for the benefit of any Associated Company and to hold such offices in the Company or any Associated Company as the Board may

 

 


 

6

 

reasonably require, but without further remuneration (except as otherwise agreed in writing between the parties). The Executive may, without prejudice to his rights, be required to be seconded to the employment of any Associated Company. However, the Executive will not be required to perform such services which he cannot reasonably be expected to perform or which are inconsistent with his role as Group Finance Director.

 

 

(c)      

The duties of the Executive as an officer of the Company or of any Associated Company shall be subject to the Articles of Association of the relevant company and shall be separate from and in addition to his duties under this Agreement. Save where the Executive is a director of the Main Board if, during the continuance of this Agreement, he ceases to be in office as a director of the Company or of any Associated Company (otherwise than by resignation or unless the Executive is prohibited by law from acting as an Officer of the Company or an Associated Company) this Agreement shall nevertheless remain in force as if the Executive's employment is that of executive manager rather than that of director.

 

(d)      

The Executive will report to Fred Goodwin, Group Chief Executive or to such other person as the Board may specify from time to time.

 

(e)      

Once notice to terminate the Executive’s employment has been given by the Company or by the Executive under Clause 3, the Company may at its absolute discretion require the Executive not to attend work and/or not to undertake any of the Executive’s duties during any period of notice, provided that the Company shall continue to pay the Executive his salary and provide his contractual benefits under this Agreement.

 

(f)      

Further, at any time during such period of suspension referred to in Clause 5(e) above the Executive shall at the request of the Board immediately resign without claim for compensation from any office as a director of the Company or Associated Company and from such office held by the Executive in the Company or Associated Company.

 

(g)      

Any period of notice during which, pursuant to Clause 5(e), the Executive shall be required not to attend at work and/or not to undertake any of the Executive’s duties shall count towards any period of restriction set out in Clauses 24(b) (I), (iii) or (iv).

 

 


 

7

6.      

PLACE OF EMPLOYMENT

 

 

The Executive will normally work in Edinburgh, but may be required to travel and reside on a temporary basis elsewhere in the United Kingdom or abroad in the performance of his duties. The Executive shall not be required to reside permanently outside the United Kingdom, without his consent, but can be required to work at any place within reasonable travelling distance of either the Executive’s home or the Executive’s normal place of work.

 

7.      

HOURS OF WORK

 

 

The normal hours of work are from 9.00 a.m. to 5.00 p.m. (Monday to Friday) inclusive of one hour for lunch daily, but the Executive is expected to work reasonable additional hours when necessary for the performance of his duties without additional remuneration. The Executive agrees that the maximum working week set out in Regulation 4 of the Working Time Regulations 1998 will not apply. The Executive agrees to give the Company three months’ written notice should the Executive wish Regulation 4 of the Working Time Regulations 1998 to apply.

 

8.      

OTHER INTERESTS

 

 

The Executive shall not, during the term of this Agreement (except with the Board's prior consent in writing) be directly or indirectly engaged or concerned in the conduct of any business other than the business of the Group or be directly or indirectly interested in any other business save through holding or being interested in investments (quoted or unquoted) not representing more than two per cent of the issued equity capital or any other class of share or debenture capital of any one company.

 

9.      

RBS elect

 

 

(a)      

The Company operates a flexible compensation and benefits package called RBS elect. The Salary Element forms part of the Executive’s ValueAccount under RBS elect and is used to calculate certain benefits such as pension, Profit Share and any discretionary bonus payment or any other payment directly linked to salary. The Salary Element would also be used to calculate severance payments including redundancy.

 

 


 

8

 

 

As of the date of this Agreement, the Executive’s ValueAccount is £660,000, which includes the Salary Element of £600,000 per annum. Full details of RBS elect are contained in the Company’s guidebook in relation to the scheme.

 

 

 

 

(b)      

The Executive’s ValueAccount less the cost of any benefits elected through RBS elect will be paid monthly on 18th day of each month (or on the last preceding working day where 18th day falls on a weekend) and shall be at the absolute discretion of the Company subject to review annually on the 1st day of April of each year or any other day approved by the Group Remuneration Committee with any adjustments having immediate effect.

 

 

(c)      

All remuneration payable in cash to the Executive under this Agreement shall be credited to a bank account to be maintained by the Executive with the Company or with another company in the Group.

 

 

10.

BONUSES

 

 

(a)      

Subject to Clause 10 (b) below, the Executive may, at the absolute discretion of the Remuneration Committee, be entitled to participate in any Executive Bonus Scheme as approved by the Remuneration Committee.

 

 

(b)      

If the Executive is serving out notice whether given by the Executive or the Company, or is dismissed, the Executive will not be entitled to receive a bonus which would or may otherwise be due to the Executive whether paid in cash or in shares as set out in Clause 10 (a) above save in the case of the Executive serving out notice of redundancy given by the Company, in which case the award of any bonus shall be at the absolute discretion of the Remuneration Committee.

 

11.

PROFIT SHARING

 

 

The Executive shall be eligible to participate in the RBSG's Profit Sharing Scheme, the terms and conditions of which will be made available to the Executive. Any entitlement is calculated by reference to the Executive’s Salary Element.

 

 


 

9

12.      

EXECUTIVE SHARE OPTION SCHEME

 

 

The Executive shall, at the absolute discretion of the Remuneration Committee, be eligible to participate in the Company's Executive Share Option Scheme.

 

13.      

PENSION SCHEME AND DEATH-IN-SERVICE

 

 

(a)      

Subject to the appropriate Inland Revenue approval and to the Rules of The Royal Bank of Scotland Staff Pension Scheme (the “Pension Scheme”) in force, from time to time the Executive shall automatically become a non-contributory member of the “Pension Scheme” unless or until the Executive provides to the Company and the Trustees written confirmation of his intention to opt out.

 

 

(b)      

A Contracting Out Certificate issued in terms of Part III of the Pension Schemes Act 1993 is in force in relation to the Executive's employment

 

 

(c)      

Should the Executive wish to transfer any pension rights already accrued in other schemes to the Pension Scheme, the - Pension Scheme is fully approved by the Inland Revenue and has power to accept transfer payments

 

 

(d)      

The Company operates a voluntary contributions plan under which the Executive can augment his pension within certain limits and further details will be provided by the Company upon request

 

 

(e)      

Whilst the Executive is a member of the Pension Scheme and receives a basic salary in excess of the Pension Cap, the Bank will make contributions to The Royal Bank of Scotland Group plc Funded Unapproved Retirement Benefits Scheme the “FURBS” for the Executive. For the tax year 2004/2005 the total contribution (including tax and National Insurance) will be 30% of the Executive’s Relevant Salary (as defined in the FURBS rules). At the current rates of tax and National Insurance, this would provide a contribution to the FURBS amount of approximately 16%. The Company reserves the right to vary the rate of the FURBS contribution from time to time. The contributions will be paid into an individual FURBS trust in the Executive’s name and the Executive will be able to choose from a range of investment options within his own FURBS trust. Under UK pensions

 

 


 

10

 

legislation the Executive’s pensionable salary is restricted to the general earnings capped figure – this is the “Pensions Cap”.

 

 

(f)      

To the extent that any salary related lump-sum payment made by the Pension Scheme in respect of the death of the Executive while in service before the Normal Pension Date as defined in the Pension Scheme is less than four times the Executive’s Salary Element by reason only of Section 590C of the Income and Corporation Taxes Act 1988 (which deals with the earnings cap), the Company shall ensure that a payment is made equal to the amount of the difference. This benefit will be subject to any restrictions imposed by an insurance company with which it is insured.

 

 

14.      

HOLIDAYS

 

 

(a)      

The Company's holiday year runs from 1 January to 31 December. The Executive will be entitled to 30 working days holiday to be taken at such time or times as the Executive shall request and agree with the Company plus a further 8 days to be taken at times to be determined by the Company (which would normally be Bank Holidays). The Company reserves the right to request the Executive to work on Bank Holidays

 

 

(b)      

In the event that the Executive is not employed throughout a full holiday year, the Executive's future or accrued holiday entitlement shall be reduced pro rata according to each completed month of employment during that holiday year.

 

 

(c)      

There shall, subject to the following provisions of this Clause 14, be no right to payment in lieu of unused holiday entitlement. The Executive shall be entitled to be paid in respect of any holiday entitlement accrued due but not taken at the date of termination of this Agreement provided that such termination has not occurred under the provisions of Clause 23(a).

 

 

 

 

(e)

During any period of notice the Company shall be entitled, at its own discretion, to require the Executive to take accrued and outstanding holiday entitlement or to make payment in lieu of such outstanding entitlement.

 

 

 

 

(f)

Upon termination of this Agreement the Executive will repay to the Company any salary received for holidays taken by him in excess of his

 

 


 

11

 

 

accrued entitlement. Any sums due to the Company may be deducted by the Company from any monies owed to the Executive.

 

 

15.      

HOUSE PURCHASE AND STAFF BORROWING

 

 

(a)      

The Executive shall be entitled to participate in the Company's Staff House Purchase Scheme. The details will be made available by the Company,

 

 

(b)      

Concessionary interest rates will be available to the Executive for personal loans, subject to the terms for such staff lending in force from time to time.

 

16      

EXPENSES

 

 

The Executive shall, subject to the production of the relative receipts or other satisfactory evidence and compliance with the Company’s Travel & Expenses policy in force from time to time, be reimbursed for all out-of-pocket expenses incurred in the performance of his duties, including expenses of entertainment, subsistence and travelling. In order to facilitate payment of expenses, the Executive will be supplied with a credit card for use solely in this connection.

 

17.      

DEALING IN INVESTMENTS

 

 

(a)      

The Executive will be subject to the Company's Staff Dealing Rules which require prior permission to be obtained before dealing in most types of securities transactions and for requests and authorisations to deal to be confirmed in writing on the appropriate Company form. The Company also operates a closed period during which the Executive will not be permitted deal in RBSG shares. Failure to abide by these rules will constitute serious misconduct for the purposes of any disciplinary action.

 

 

(b)      

Details of the Company's Staff Dealing Rules are contained in the Conduct of Accounts Manual.

 

 


 

12

18.      

SICKNESS

 

 

(a)      

There is no contractual right to payment in respect of any periods of absence due to sickness or incapacity and any such payments will be made at the Company’s sole discretion.

 

 

(b)      

If the Executive is absent from work due to illness, injury, or accident the Company may, at its sole discretion, continue to pay Company sick pay at 100% of the Executive’s ValueAccount rate for the first 182 days of incapacity. Thereafter, an income protection benefit equal to 55% of his ValueAccount rate (inclusive of any state sickness benefit payable) may be paid for up to a further five years subject to the qualifying criteria set out in Clauses 18 (a) – 18 (e) and 18 (h) being met;

 

 

 

(i)      

any benefit paid during the initial 182 days absence will include an allowance in lieu of holiday entitlement. Consequently normal holiday entitlement will cease to accrue;

 

 

 

(ii)      

during any extended absence period beyond the initial 182 days absence and up to five years, the overall level of benefit will increase each January in line with any increase applied to payments under the Company’s pension fund;

 

 

 

(iii)      

during the entire extended absence period, the Executive will continue to receive additional Company benefits, including non- contributory pension scheme and RBSG’s Profit Sharing Scheme and will remain eligible to participate in the RBSG Sharesave Scheme. With the exception of the Company pension, all salary- related benefits will be linked to the current level of income protection benefit as defined in Clause 18 (b). Pension benefits will be based on the Executive’s Salary Element before his sickness absence and will be increased each year in line with any increase applied to payments under the Company’s pension fund;

 

 

 

(iv)      

at the end of the five year extended absence period, if the Executive is unable to return to work he will be considered for ill- health retirement. Ill-health retirement will only be considered

 

 


 

13

 

 

 

where the Executive satisfies the relevant ill-health retirement criteria; and

 

 

 

 

 

 

(v)      

all periods of long-term sickness absence will be regarded as continuous service for the purpose of pension and other benefit calculations.

 

 

 

(c)      

The Executive will self-certify his incapacity for absences of up to seven consecutive days (including weekends and statutory holidays).

 

 

(d)      

A doctor’s certificate must be submitted to the Company for absences of more than seven consecutive days. Thereafter, the Executive must submit a new doctor’s certificate on a weekly basis to cover further periods of absence.

 

 

(e)      

The Company reserves the right to request the Executive to provide evidence for any period of absence including those that would normally be self-certified.

 

 

 

 

For the purposes of assessing the entitlement of the Executive to Statutory Sick Pay, the qualifying days will be Monday to Friday inclusive.

 

 

 

 

(f)      

If the Executive is incapable of performing his duties because of injuries sustained wholly or partly as a result of actionable negligence, nuisance or breach of any statutory duty on the part of any person other than a company in the Group ("the third party") or if the Executive is covered by any health insurance scheme (“the insurance policy”) all payments made to the Executive under Clause 18(b) above shall (to the extent that compensation for loss of earnings is recoverable from the third party or under the insurance policy), constitute loans by the Company (or by any Associated Company from whom the Company may have procured payment of the Executive's salary) to the Executive and shall be repaid when the Executive recovers compensation for loss of earnings from the third party by action or otherwise or under the insurance policy.

 

 

(g)      

Without prejudice to the provisions of the immediately preceding Clause 18 (f), in the event that the Executive has been incapacitated from performing his duties by reason of injuries sustained wholly or partly as a result of

 

 


 

14

 

 

actionable negligence or as a result of matters which are covered by the insurance policy, the Company shall be entitled to require the Executive either:

 

 

 

 

 

 

(i)      

(subject to the Company agreeing to indemnify the Executive against all reasonable legal expenses) to take legal proceedings to enforce his rights against any third party who has committed such an actionable negligence against him and/or to pursue a claim under the insurance policy; or

 

 

 

(ii)      

to assign his right to do so to the Company or any Associated Company in an attempt to recover from such third party and/or the relevant insurance company compensation for any loss of earnings sustained by the Executive.

 

 

 

(h)      

The Executive shall (including during any period of incapacity) at the request and expense of the Company submit to medical examinations by a medical practitioner nominated by the Company. The results shall, subject to the provisions of the Access to Medical Reports Act 1988, be disclosed to the Company.

 

 

19.      

CONFIDENTIALITY

 

 

(a)      

The Executive shall not (except as required in the proper performance of his duties or with proper authority) at any time directly or indirectly divulge or communicate to any person or make use of any of any information obtained or acquired by the Executive relating to the Group, its customers, its business and policy and its management which is, or is deemed by the


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